Total subsidy proposed to be Tk 2.89t in FY24

The total government subsidy for the next fiscal year (FY) is proposed to be of TK 2.89 trillion, including direct tax expenditures of TK1.78 trillion mainly on account of exemptions and rebates.

The microfinance sector would receive the highest amount at 12 per cent or Tk 153.15 billion of the direct tax expenditure, followed by remittance 9.0 per cent or Tk 112.87 billion, power and energy 7.0 per cent or Tk 83.80 billion, economic zones and hi-tech industry 4.0 per cent or Tk 46.12 billion.

Garments and textile, poultry and fisheries, IT and software and capital gains from share market would have substantial stakes in the fund allocated in the budget for FY 2023-24 as Finance Minister AHM Mustafa Kamal placed it in parliament on Thursday.

Garments and textile would get 3.0 per cent or Tk 34.38 billion, followed by poultry and fisheries 2.0 per cent or Tk 31.20 billion, IT and software 1.0 per cent or Tk 14.77 billion, and capital gains from share market 1.0 per cent or Tk 9.66 billion.

If this subsidy was collected as tax, it would be added to the total tax collection and the amount of tax would increase, Mr Kamal said, explaining that the 'Direct Tax Expenditure' creates overall employment along with economic stimulation, social balance and industrial support.

In line with international best practices, the Income Tax Department of the National Board of Revenue (NBR) has for the first time in Bangladesh estimated the direct tax expenditure based on the analysis of field-level factual data.

The government offers direct tax expenditure as rebates, discounts, exemptions, reduced rates of taxation and exclusion of income from computing total taxable income.

Direct tax expenditure in the FY 2020-21 was calculated at Tk 1.25 trillion - corporate taxpayers Tk 853.14 billion and individuals Tk 404.99 billion.

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